This is what most people ask when they're willing to reduce their mortgage payments by taking advantage of low rates. To find the answer, check out the mortgage refinance tips given below.

* Build up equity:
It is feasible to go for a refinance when you have built up at least 10% equity in your home (For Fannie Mae owned mortgages, the value is 5%). It is also possible for you to choose the option if your equity is less than 5%, but you may have to pay a certain amount of cash in order to make up for the difference in equity.

* Check if mortgage refinance rates are low:
It's better to follow the 2% Rule which suggests that you can enjoy the benefits of a home refinance if your mortgage refinance rate is 2% lower than that on your current loan. The interest savings will help you recoup the costs you've paid for the new loan provided you stay in the property for a certain period of time (break-even period). However, there are no-cost as well as low-cost refinance loans wherein the costs are included into the loan. But you can expect comparatively higher rates on such loans. Moreover, these loans are limited when the market is in a credit crunch. Know more about when to refinance rule of thumb.

It is advisable that you compare mortgage refinance rates offered by different lenders in order to find the best rate that you can afford. This will help you save more in interest over the life of the loan.

* Pay off any late payment:
There is no such limit on the number of times you can go for home refinance loans. Most lenders prefer that you have no late payment for the past 12 months before you switch over to a new loan.

* Remove negatives and improve credit score:
Pull your credit report from the bureaus and review it for any negative items (late pays, collections etc) and inaccurate detail. Try to dispute negative items and remove them from the report. If required pay off any unpaid debt. Otherwise, you won't get a low rate and may not even qualify. Of course there are lenders in the subprime market who may offer you a bad credit refinance loan, but it's better to avoid them as they'll possible charge higher rates and fees.

Hello mdonnadesigns,

To answer your question, yes it is a good time to refinance. But I want you to be careful. Before you start the process, make sure you get a "Tri-Merge" Credit Report. Working in the industry for so long, I have noticed that Homeowners only pull one credit report, thinking this is all they need. But when the broker pulls your credit, he is getting it from all three credit agencies. What rate you may qualify for will depend on all three, no just one. So if you pullled your own report and it states a 700, you may think you will qualify for a low rate.

Now the broker will work up a loan program for you based on the 700 credit score, giving you the impression that you are getting a great loan, all along knowing this is not going to be the final loan.

Another thing you must look out for in this market of today, is even if you have great credit, does not mean you will qualify. The lenders are looking at all the debt you owe. They may want you to paydown or payoff credit cards to get a loan. And why would you want to do that when you may be happy with your credit cards and do not wish to eliminate them.

Also get more than one appraisal, or go to a trusted real estate agent/s and get some comparables against your property. It's best to do this before paying for an appraisal. You don't want to pay for an appraisal then later on find out that it comes up short or was a bad appraisal in the first place, which happens quite often.

So make sure you pull a Tri-Merge Credit Report, get comparables on your property, and then shop around for the best loan program.

This has been from the "Mortgage Man".

As the rates are the lowest in years it is most certainly a good time to refinance your loan the only problem is along with the great rates and the state of the housing industry your home might not have enough equity in it to refinance it, also their are cost's involved,The banks are also very stringent on qualifying their customers for a refinance, Its kind of funny but in many cases you have a better chance at getting a loan modification which costs nothing than you do in getting a Refinance